Nvidia overtakes Apple as second most valuable company

Shares in Nvidia rallied to record highs on Wednesday, with the artificial intelligence chip maker's valuation breaching the $3 trillion mark and overtaking Apple to become the world's second most valuable company.

Nvidia is preparing to split its stock 10 for one, effective on June 7, a move that could increase its appeal to individual investors.

The surge in Nvidia's market value above Apple's marks a shift in Silicon Valley, which the company co-founded by Steve Jobs has dominated since it launched the iPhone in 2007.

Nvidia's stock rose 5.2 per cent to end the day with a valuation of $3.012 trillion. Apple's market capitalisation was last at $3.003 trillion after its stock climbed 0.8 per cent.

Microsoft remained the world's most valuable company at $3.15 trillion as its shares climbed 1.9 per cent.

Nvidia's stock has surged 147 per cent so far in 2024, with demand for its top-of-the-line processors far outstripping supply as Microsoft, Meta Platforms and Google-owner Alphabet race to build their AI computing capabilities and dominate the emerging technology.

It has rallied nearly 30 per cent since May 22, when Nvidia issued its latest stellar revenue forecast.

Optimism about AI lifted chip stocks broadly on Wednesday, with the PHLX chip index surging 4.5 per cent. Super Micro Computer, which sells AI optimised servers built with Nvidia chips, climbed 4 per cent.

Nvidia chief executive Jensen Huang this week was the subject of wall-to-wall coverage on Taiwanese TV and was mobbed by fans when he visited the Computex tech trade fair in Taipei, where he was born before moving to the US.

While Nvidia rides a wave of AI enthusiasm on Wall Street, Apple is struggling with weak demand for iPhones and tough competition in China, the world's biggest smartphone market.

Some investors also view Apple as lagging behind other technology heavyweights as they rush to build AI features into their products and services.

Analysts' projections for Nvidia's future earnings have outpaced its stellar stock gains.

Nvidia is trading at 39 times expected earnings, making it less expensive on that basis than a year ago, when it traded at more than 70 times expected earnings, LSEG data showed.